Television can make you rich, really rich. Witness what’s happening to the pay packets of top managers at ProSiebenSat.1 in the Munich suburb of Unterföhring, where money apparently grows on trees.
First, the two private equity companies KKR and Permira cashed in on their seven-year ride as majority shareholders, to the tune of €1.2 billion ($1.6 billion). The windfall was due partly to the soaring stock price since the investors entered ProSiebenSat.1 in 2006. But it mostly came from the Bavarian media company’s 2007 takeover of the SBS Broadcasting Group, which probably generated €750 million in profits.
The money generated for these two financial firms – known unfavorably in some German political circles as “locusts” – apparently merited a big thank-you to the company’s board of directors. Which is why ProSieben’s chief executive, Thomas Ebeling, is getting a €23.4 million bonus from the company’s former majority shareholders.
His colleagues on the board are also being richly rewarded. Financial director Axel Salzmann is receiving €12.8 million, digital director Christian Wegner €10.7 million, and legal director Conrad Albert €8.5 million. Heidi Stopper, the board member responsible for personnel development, must make due with €4.3 million, but she hasn’t been on the board for so long. Several managers not on the board also received generous awards totaling slightly less than €17 million. A company spokesperson wouldn’t name them when asked.
All in all, the bonuses for top management at ProSieben add up to €76.8 million, or $103 million.
The background for the extra money is the complete withdrawal of ProSieben’s intermediate holding company, Lavena, at the end of January. The company, which was owned by KKR and Permira, held all the voting rights. After a shareholders’ meeting at the end of June, millions of euros in bonuses were transferred to the accounts of top managers.
Not much fuss was made within the company about the financial windfall. Since bonuses of this sort must be made public, however, the flow of money was noted in the semi-annual report – way down on page 78.
“The money doesn’t come from ProSieben,” said an associate of Mr. Ebeling. “The amount was decided upon by KKR and Permira. It is based on the performance of the management.”
Mr. Ebeling has actually improved a few things since taking over at ProSieben in March 2009. The enthusiastic kick-boxer was initially belittled by company veterans. A former cigarette and pharmaceutics manager was supposed to lead a run-down media company to new heights? After the bankruptcy of majority owner KirchMedia in 2002, the company was milked by Hollywood investor Haim Saban before being sold at auction to KKR and Premira.
Thomas Ebeling worked through ProSieben and turned it into a digital media company that, even in economically difficult years, delivered splendid earnings.
But over time, Mr. Ebeling showed his critics what he was made of. He reduced costs, sold the news broadcaster N24, set up channels and focused on new digital businesses such as gaming. The man worked through ProSieben like a mole, and turned it into a digital media company that, even in economically difficult years, delivered splendid earnings. The company’s stock soared: Shortly after Mr. Ebeling took over, a share was worth less than €1. This week it had nearly cracked €31.
The company that Mr. Ebeling whipped into shape had already made him rich before the recent KKR-Permira bonus. In February 2013, the former Novartis manager sold €7.5 million in stock at a market price of €25.12 per share. A few days later, news got out that KKR and Permira were planning an exit. In addition, the 55-year-old receives an annual salary of around €2 million as chief executive.
Perhaps Thomas Rabe, head of Bertelsmann, is kicking himself this morning. He too, was offered the top job at ProSieben, but declined in hopes of landing the CEO position at the German media giant. Certainly bonuses like those doled out in Unterföhring are not paid at Bertelsmann, based in the modest city of Gütersloh in the state of North Rhine-Westphalia.
Mr. Ebeling is quite unpretentious in his personal manner. In contrast to his predecessor, who drove a Ferrari as a company car, Mr. Ebeling is happy with an Audi A5. He wears jeans and casual shirts, and is forthright and outspoken.
What counts for Mr. Ebeling is performance. He was the first to recognize that growth was limited in the traditional TV business. So he invested strongly in digital areas and sold the foreign TV business. Now the ProSieben group (market value €6.8 billion) is trying to enter Germany’s blue-chip DAX stock index.
That would be another coup for Mr. Ebeling. But nothing will be as rewarding as the love of his locust investors.
Hans-Peter Siebenhaar covers the media industry for Handelsblatt. He can be reached at email@example.com